Qinhuangdao Port Co., Ltd.'s (HKG:3369) dividend will be increasing from last year's payment of the same period to CN¥0.0931 on 27th of August. Even though the dividend went up, the yield is still quite low at only 4.0%.

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Qinhuangdao Port's Future Dividend Projections Appear Well Covered By Earnings

It would be nice for the yield to be higher, but we should also check if higher levels of dividend payment would be sustainable. However, prior to this announcement, Qinhuangdao Port's dividend was comfortably covered by both cash flow and earnings. This means that most of what the business earns is being used to help it grow.

Looking forward, earnings per share could rise by 7.0% over the next year if the trend from the last few years continues. If the dividend continues on this path, the payout ratio could be 26% by next year, which we think can be pretty sustainable going forward.

See our latest analysis for Qinhuangdao Port

Dividend Volatility

While the company has been paying a dividend for a long time, it has cut the dividend at least once in the last 10 years. Since 2015, the annual payment back then was CN¥0.35, compared to the most recent full-year payment of CN¥0.085. This works out to a decline of approximately 76% over that time. A company that decreases its dividend over time generally isn't what we are looking for.

We Could See Qinhuangdao Port's Dividend Growing

Dividends have been going in the wrong direction, so we definitely want to see a different trend in the earnings per share. Qinhuangdao Port has seen EPS rising for the last five years, at 7.0% per annum. Qinhuangdao Port definitely has the potential to grow its dividend in the future with earnings on an uptrend and a low payout ratio.

Our Thoughts On Qinhuangdao Port's Dividend

In summary, it's great to see that the company can raise the dividend and keep it in a sustainable range. The payout ratio looks good, but unfortunately the company's dividend track record isn't stellar. This looks like it could be a good dividend stock going forward, but we would note that the payout ratio has been at higher levels in the past so it could happen again.

Companies possessing a stable dividend policy will likely enjoy greater investor interest than those suffering from a more inconsistent approach. Meanwhile, despite the importance of dividend payments, they are not the only factors our readers should know when assessing a company. As an example, we've identified 1 warning sign for Qinhuangdao Port that you should be aware of before investing. If you are a dividend investor, you might also want to look at our curated list of high yield dividend stocks.

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